With the festive season fast approaching, a lot of us are eager to finally action our plans of buying a new house – given the auspicious timing, and the flurry of offers. Along with attractive offers on property prices and new projects, homebuyers can also make use of the competitive offerings on home loans during this time of the year. Be it low home loan interest rates, flexibility in repayment, or waivers on processing fees – if applicants time themselves right, and sharpen their loan eligibility, they stand to gain substantially in their homebuying experience, overall – in terms of savings and choices.
While it is easy it is to receive a favourable home loan on your terms, it is necessary that you familiarise yourself with the home loan application process before making a formal request. This helps prepare for the process better, as you know what to do, what to expect and what the lenders’ expectations are – before they sanction a loan amount that is aligned to your requirements.
Conducting thorough research and doing your due diligence before you apply for a home loan are implicit rules that all home loan aspirants should ensure they adhere to. It enhances your chances of securing a low interest rate home loan that promises to save on your total cost of borrowing. In this article, we illustrate all the steps of applying for a home loan till you receive approval and disbursal, so you can enjoy a seamless home loan borrowing experience.
The general process for a home loan starts with a formal application and where you share the necessary information with the lender. This allows the lender to verify your details and evaluate your home loan eligibility. Most lending institutions to ask for the following documents to verify your credit-eligibility:
Once you formalise your home loan application, the lender evaluates your ask against your repayment capacity and feasibility to gauge your risk levels. This includes a credit assessment of your profile, document and technical verification of the property and other formalities that the lender’s policy dictates. You can learn more about this in the following points.
There is always a non-refundable loan processing fee levied which will be deducted from the applicant. Typically, lenders charge an amount within the range of 0.5% and 7% of the total home loan amount as the processing fees and this amount is put towards facilitating your loan verification process.
After the submission of the home loan application form and the processing fees, the lender will verify the details submitted and only then decide the amount which the applicant is eligible for.
The applicant should be meeting the lender’s representative in about a week from submitting the home loan application. This helps the lender determine the repayment capacity of the applicant.
After communication with the lender’s official, the lender will move toward the verification of the details and information, which the applicant has provided for the home loan application.
Further on, the lender’s representatives will check with the borrower’s workplace and the resident to certify the information the applicant has provided in the application papers. They will gauge the credit history of the borrower by analyzing records they’ve received from the Credit Information Bureau India Limited (CIBIL).
The most vital part of a home loan process is authenticating a borrower’s repayment capability. Based on the comfort of the borrower to repay the home loan principal with interest and on time, the lender may approve or deny the home loan request. In case the bank issues a conditional approval, then the assured conditions will have to be satisfied before the loan is used.
After the verification of the details of the borrower, the home loan lender proceeds to draft an offer letter that includes the following details:
On receiving the offer letter, the borrower needs to sign the acknowledgment letter shared by the lender -- after going through the terms and conditions mentioned in it. An acknowledgment copy is, typically, a replica of the offer letter, which the lender keeps with itself for its records. The administrative fees (if any) levied by the lender also need to be paid by the borrower during this step.
After the process mentioned above has been fulfilled, the home loan registration process kicks off. The legal documents are to be prepared in a format that will be approved by the lending institution’s lawyer on a stamp paper. Post this, a home loan borrower will be required to submit post-dated cheques for the agreed term and sign the agreement.
The home loan disbursal process begins once the home loan borrower signs the agreement. Based on the kind of disbursal agreed upon, the lender goes ahead to sanction a certain loan amount.
The borrower must always keep in mind that before applying for a home loan, it is essential to carry out a thorough study and shortlist the financial institutions that cater best to the applicant’s needs. Along with that, the applicant must choose the appropriate home loan option and deal with their interest, such as a home loan for buying a ready or self-construction property or home improvement.
Disclaimer: This article was published in association with Bajaj Housing Finance Limited and not created by TNM Editorial.
